AIG facing liquidity crisis!

**uls** · September 17th, 2008 01:30 PM

Originally Posted by Zeus

Ibig sabihin mababayad na ni AIG ang mga obligations niya, safe na rin ba siya?

For now, yes, AIG will be able to meet its obligations.

It was short of cash... now it has $85B.

Safe? I don't know talaga. But considering 80% of AIG is now owned by the US govt... sounds kinda safe... hehe

That $85B loan is just a lifeline... to keep AIG operating until it can sell assets to raise money...

The purpose of the loan was to prevent a bankruptcy filing...

Don't know what happens to AIG weeks or months or years from now.

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Statement from AIG:

AIG is a solid company with over $1 trillion in assets and substantial equity, but it has been recently experiencing serious liquidity issues.

We believe the loan, which is backed by profitable, well-capitalized operating subsidiaries with substantial value, will protect all AIG policyholders, address rating agency concerns and give AIG the time necessary to conduct asset sales on an orderly basis.

We expect that the proceeds of these sales will be sufficient to repay the loan in full and enable AIG's businesses to continue as substantial participants in their respective markets.

Policyholders of AIG companies around the world can rest assured that AIG’s commitments will continue to be honored.

**tidus1203** · September 17th, 2008 02:41 PM

$85M will eventually go down if AIG can't find a more stable cash flow. Also the interest being charged is prime + 8% so this is no cheap loan.

**uls** · September 17th, 2008 03:13 PM

Ya, AIG can easily deplete that $85B just paying its obligations...

AIG has to raise money from asset sales quickly.

**gearhead** · September 17th, 2008 03:57 PM

So its a stopgap measure? What is your fearless forecast?

**creepy** · September 17th, 2008 04:04 PM

The loan extended by the US government (Fed) is convertible into shares.

Assuming the entire loan is converted, the US govt would end up owning 80% of AIG. I think the fact that the US govt would own 80% of AIG may offer a fair measure of comfort (even if it is not ironclad) for its creditors.

**b1rken5tock** · September 17th, 2008 04:05 PM

I wonder if the Large Hadron Collider has something to do with this financial situation. SInce the LHC was powered up, financial institutions started collapsing, maybe due to unseen Black Holes created by LHC. Scientists believe that Black Holes collapses and sucks every objects near it....

If these big losses are occurring, some one must be gaining from this....

**uls** · September 17th, 2008 04:44 PM

hahaha baka nga...

when they switched on the LHC, nag implode ang Wall Street

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Even if AIG is alive right now, it's far from healthy.

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Ya the loan is just a stopgap.

Pang tawid bankruptcy lang yan.

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Is the US govt really going into the insurance business?

Hindi kaya orderly liquidation lang ito?

The US govt buys AIG some time for AIG to meet its counterparty obligations, sell itself piece by piece to repay the loan...

then AIG disappears from the face of the earth.

This isnt an AIG bailout.

It's a counterparty bailout.

**jeDi13** · September 17th, 2008 04:56 PM

Originally Posted by b1rken5tock

If these big losses are occurring, some one must be gaining from this....

could be. but in the case of AIG, i thinks it's more of liquidity issues. meaning, they have more fixed assets than cash, making it short for AIG to throw cash for insurance claims, etc. once they have sold their fixed assets, it should balance their assets by putting a substantial amount in their liquid assests. but selling most fixed assets can't be done overnight. unless you're willing for a sacrificial sale.

**LadyRider** · September 17th, 2008 05:15 PM

Sabi nga nila, "When you are up there, the only way is down!"

Benta na lang nila ang AIG sa Sultan ng Brunei! (hehehehe)

Chicken feed yan for a man who earns $1B dollars a day!

Kaya nga may taga palakpak sya at taga tawa pa sa kaharian nya eh! (hehehehe)